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Key types of operational targets
Cost & volume
Efficiency & flexibility
Environmental…read more

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Cost & volume targets
· Traditional measure of cost-effectiveness
is "unit cost" (total costs divided by total
· The business with the lowest unit cost is in
a strong position to be able to compete by
being able to:
­ Offer the lowest price, or
­ Make the highest profit margin at the average
industry price…read more

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Examples of cost & volume targets
· Productivity & efficiency (e.g. units per
week or employee)
· Number of items to produce (per time
period, or per machine)…read more

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The Business Need for Quality
· Quality is one of the most important
challenges facing a business
· Markets are more competitive: customers are
­ Knowledgeable
­ Demanding
­ Prepared to complain about poor quality
­ Able to share information about poor quality (e.g. via email
& social networking)
· If a business can develop a reputation for high
quality, then it may be able to create an
advantage over its competitors…read more

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Possible quality targets
· Scrap / defect rates: a measure of poor quality
· Reliability ­ how often something goes wrong;
average lifetime use etc
· Customer satisfaction ­ measured by customer
· Number / incidence of customer complaints
· Customer loyalty ­ e.g. percentage of repeat
· Percentage of on-time delivery…read more

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